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Construction takes place on the site of the new Ford manufacturing plant in Becancour, Que. on Aug.17, 2023.Christinne Muschi/The Canadian Press

Ford Motor Co. F-N and two major South Korean industrial companies are making Quebec a key jurisdiction in their North American electric-vehicle manufacturing strategies, committing Thursday to building a $1.2-billion battery parts factory, backed by $644-million in government funding.

Ford, EcoProBM and SK ON Co. Ltd. announced plans to build a cathode manufacturing facility in Bécancour, Que., a city of 15,000 that has emerged as an EV supply chain hub. The factory is expected to open in 2026, with the capacity to make components for batteries in approximately 45,000 Ford vehicles each year.

“We’re pleased to be investing in these new facilities to create a vertically integrated, closed-loop battery assembly supply chain in North America,” Bev Goodman, chief executive officer of Ford of Canada, said in a news release. “We’re excited for the opportunity for our first-ever investment in Québec with a new facility that will help shape the EV ecosystem there.”

The federal and Quebec governments each committed $322-million to the project. The federal funding is a conditional contribution from the Strategic Innovation Fund, while the province granted a partially forgivable loan through government agency Investissement Québec.

General Motors Co. GM-N, South Korea’s Posco Holdings Inc. and Germany’s BASF SE have also announced plans to invest in Bécancour battery plants as part of a strategy to shorten EV supply chains. China-based manufacturers currently dominate production of batteries and their raw materials.

“We are building the foundations of an industry that will allow Quebec to become a leader in the green economy in North America,” Quebec Premier François Legault said. Bécancour is on the St. Lawrence River, roughly halfway between Montreal and Quebec City, and features a deep-water port, rail lines and highway access.

EcoProBM will oversee the day-to-day operations of the Bécancour factory, which is expected to employ 345 workers. The plant will produce components made with nickel, cobalt and manganese, which the company said will offer better performance and improved EV range compared with existing rechargeable batteries.

How the EV battery boom could change Bécancour, a quiet corner of Quebec, forever

The Quebec plant marks the Korean company’s first investment in North America. It began expanding globally two years ago by building a facility in Hungary. In a news release, EcoProBM CEO Jae-hwan Joo said: “We also are prepared to contribute to the community in Canada and Quebec, and contribute to the development of the local economy, including by hiring locally.”

Federal Industry Minister François-Philippe Champagne pitched Canadian expansion to EcoProBM and SK ON executives during two Asia trips over the past year. Prime Minister Justin Trudeau also met with EcoProBM’s leaders during his visit to South Korea in May.

In a news release, Mr. Champagne said: “We are strengthening Quebec’s key position in the electric vehicle supply chain, while continuing to build Canada’s battery ecosystem.”

SK ON has three North American factories, in Georgia, Kentucky and Tennessee. U.S. President Joe Biden’s administration made attracting investment in manufacturing – through tax breaks and subsidies – a key component of the Inflation Reduction Act, enacted last year.

In November, South Korean conglomerate LG Corp. announced plans to spend US$3-billion on North America’s largest cathode factory, in Tennessee. LG’s plant will be approximately three times the size of the proposed Bécancour facility.

Bécancour’s emergence as an EV centre defies the automakers’ historic tendency to locate Canadian factories in Ontario. In April, Ford committed $1.8-billion to retooling its plant in Oakville, Ont., for EV production. Belgian metals refiner Umicore SA, Volkswagen and Chrysler parent Stellantis NV are also building battery facilities in Ontario, with federal and provincial government support.

Ford is midway through a five-year plan to spend US$22-billion on EV production, and has rolled out electric versions of its bestselling vehicles, including the Mustang and F-150 pickup. In a recent report, analysts at RBC Capital Markets said the automaker is sacrificing short-term profitability to build EV market share and move inventory.

Ford recently walked back forecasts that profits from EV sales would match those of its internal combustion engine vehicles by the end of this year. However, the company committed to earning an 8-per-cent profit margin on EVs by 2026, a return comparable to its traditional automotive division.

EV market leader Tesla Inc. TSLA-Q began cutting prices on many models earlier this year. Ford fought back this summer by slashing prices on its flagship Mustang Mach-E and F-150 Lightning pickup models. Ford cut the base price of the electric version of the country’s bestselling truck by up to $15,000, lowering the base price of an F-150 Lightning to $59,000, and dropped the price of an electric Mustang by up to $11,000.

In addition to building an EV manufacturing sector, Quebec is home to two planned lithium mines, which will produce the raw material for batteries. The Nemaska property, owned by Philadelphia-based Livent Corp. and Investissement Québec, is expected to begin producing in 2024, while a project near James Bay owned by Australia’s Allkem Ltd. is scheduled to open in 2026.

Follow Andrew Willis on Twitter: @Willis_andrewOpens in a new window

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